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Monetization and Business Models for Social Games - Lisa Marino, CRO of RockYou presentation from GDC 2010. "Social games are addictive, so addictive that developers are making millions of dollars from them. There are multiple models emerging in the industry for monetizing social games. Whether it's sponsorships, virtual currencies, CPM or CPE, the opportunities to make money in this space continues to grow. The question is: How do you do it? In order to be successful, developers must choose which business models to pursue and where to focus their efforts."
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Agenda
1) Making A Good Game
2) Network Effect
3) Engagement
4) Arbitrage
5) The Future of Monetization
6) Questions
Why Social Gaming is Succeeding
Fast Paced Environment Cutting Edge Ideas
Tools and information lead to better understanding.
Under-monetized International Reach
Convert Non-Gamers to Casual Gamers– Nintendo Wii
The Secret Sauce: DAUs are Everything!
Network Effect
EngagementArbitrage
Key Threshold: .2 DAU/MAU
• Reach/Virality
• User acquisition
• Re-engagement
strategies
• ARPU
• K factor
• Feature
Releases
• Competition
• Friends help
users advance
Network Effect: DAU Growth and Rengagement
With Notifications going away, expect K Factor <.7
User
Acquisition/Reengagement
Channel
Key Thresholds
Feed Posts • 3 FB users should click on every
feed post created
Requests • Focus request on friends already
in game
• Expect a 70% CTR on requests if
friend already in game
Book Marks • Expect 20% of DAUs to enter
through bookmarks
Engagement: What Have You Done for Me Lately?
5 weekly releases:
3 content, 1 viral event, 1 game play feature
Engagement: Competition Rules
• Create competition among friends using visible metrics
• Friend Walls
• Customization
• Player vs. Player engagments
Engagement: Get Friends To Help
• Increase Re-engagement rates by sending requests calling friends for help
• All Users helping get the prize
Castle Age
Engagement: How To Engage Your Users
6 Basic Strategies of Keeping Your Users– Collecting
– Decorating
– Friendship/Collaboration
– Exploring
– Caring
– Competition
Arbitrage: Where Monetization is Coming From
Users
User-Initiated Actions
User-Participation
Arbitrage: Is Your Game Monetizing Well?
Measure on Revenue/1,000 DAU’s
Best Monetizing Apps $100+/1,000 DAU’s
On Average, Apps Monetize $10-30/1,000 DAU’s
$30+/1,000 DAU’s On the right track
Arbitrage: Keys To Monetization
Drama
Friendship/Love
Competition
Collections
Gambling
Individuality
Keys to Monetization
Arbitrage: Understand Your Economy
Keep economies fluid Make currencies
valuable Let users decide how
to acquire currency and advancement
Sources and Sinks
Arbitrage: Know Your Key Demographic
Focus Tools on Your Primary Users
– Geography
– Age
– Gender
– Time Of Week
– Time Of Day
Arbitrage: Direct Payments
1-3% of DAU’s Are Paying Customers
Payment Methods Biased to Default Method.– Usually Defaulted to Best Converting Method.
PayPal
Offers
Credit Card
15%
60%
25%
Arbitrage: Capitalize On Your Existing Consumers
1st 30-40%of Purchases2nd
Entice Users to Re-Purchase Premium Currency
Conversion Rates for Repeat Consumers are Higher.
>50% of Total Revenue Should be Repeat Consumers
Arbitrage: Difference Makers in Offers Walls
Surveys
Local Strategy
Future of Monetization: Expand the Digital Goods Pie
Increase a game’s digital goods monetization rate from 3% to 25%
Future of Monetization: Advertising
Why Advertising will be Successful
Games have huge user bases so brand need to be there
Users want to level up and not pay for it
Expands Monetization rates of user base
Safe and Clean Advertising Environment
Future of Monetization: In Game Case Study
• Customized and controlled
Brand Experience
• Cost Per Engagement
Model
• In Game converts as high
as 50% of opt in users
• Highest CPMs of all
monetization tools
Conclusion
Questions?
